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Unformatted text preview: 403 12 MONOPOLY ± Market Power Topic: Market Power Skill: Recognition 1) Unregulated monopolies A) take the market price as given. B) cannot incorporate. C) cannot change the market quantity. D) can influence the market quantity and price. Answer: D Topic: How Monopoly Arises Skill: Recognition 2) The following are key features of a monopoly EXCEPT A) the monopoly is protected by a barrier to entry. B) no close substitutes exist for the good or service. C) the monopoly has a strong influence over the price of the good or service. D) the monopoly has severe diseconomies of scale. Answer: D Topic: How Monopoly Arises Skill: Conceptual 3) Which of the following statements about a mo-nopoly is FALSE ? A) Monopolies have no barriers to entry or exit. B) The good produced by a monopoly has no close substitutes. C) A monopoly is the only producer of the good. D) None of the above; that is, all of the above an-swers are true statements about a monopoly. Answer: A Topic: Legal Barriers To Entry Skill: Conceptual 4) Which of the following is LEAST likely to be a monopoly? A) The holder of a public franchise. B) A pharmaceutical company with a patent on a drug. C) A store in a large shopping mall. D) The sole owner of an occupational license. Answer: C Topic: Legal Barriers To Entry Skill: Recognition 5) A public franchise is A) an exclusive right granted to a firm to supply a good or service. B) a government issued license required to practice a profession. C) an exclusive right granted to an inventor of a product. D) a unique source of raw materials. Answer: A Topic: Legal Barriers To Entry Skill: Conceptual 6) Public franchises create monopolies by restricting A) demand. B) prices. C) entry. D) profit. Answer: C Topic: Legal Barriers To Entry Skill: Recognition 7) A patent grants A) a guarantee of quality to consumers. B) the right to practice a profession. C) an exclusive right to an inventor of a product. D) control over a unique source or supply of raw materials. Answer: C C h a p t e r 4 0 4 C H A P T E R 1 2 Topic: Legal Barriers To Entry Skill: Conceptual 8) Patents create monopolies by restricting A) demand. B) prices. C) entry. D) profit. Answer: C Topic: Legal Barriers To Entry Skill: Recognition 9) Patents are ____ barriers to entry and public fran-chises are ____ barriers to entry. A) legal; legal B) legal; natural C) natural; legal D) natural; natural Answer: A Topic: Natural Monopoly Skill: Recognition 10) An industry in which one firm can supply the entire market at a lower price than two or more firms can is called a A) legal monopoly. B) natural monopoly. C) single-price monopoly. D) price-discriminating monopoly. Answer: B Topic: Natural Monopoly Skill: Conceptual 11) Which of the following is true of a natural mo-nopoly?...
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This note was uploaded on 03/11/2012 for the course ECON 104 taught by Professor Ismailov during the Spring '11 term at London College of Accountancy.
- Spring '11